GST Considerations For New Business Owners

The Goods and Services Tax or GST is a consumption tax which charged on most Goods and Services Tax Registration in India Online and services sold within Canada, regardless of where your business is positioned. Subject to certain exceptions, all businesses are required to charge GST, currently at 5%, plus applicable provincial sales taxation’s. A business effectively acts as an agent for Revenue Canada by collecting the taxes and remitting them on a periodic basis. Businesses are also permitted to claim the taxes paid on expenses incurred that relate to their business activities. These are referred to as Input Tax Breaks.

Does Your Business Need to File?

Prior to getting yourself into any kind of economic activity in Canada, all business owners need to figure out how the GST and relevant provincial taxes apply to that company. Essentially, all businesses that sell goods and services in Canada, for profit, should charge GST, except in the following circumstances:

Estimated sales for your business for 4 consecutive calendar quarters is expected to become less than $30,000. Revenue Canada views these businesses as small suppliers and they are therefore exempt.

The business activity is GST exempt. Exempt goods and services includes residential land and property, child care services, most health and medical services and a lot more.

Although a small supplier, i.e. organization with annual sales less than $30,000 is not required to file for GST, in some cases it is good do so. Since a business is able to claim Input Breaks (GST paid on expenses) if tend to be registered, many businesses, particularly in start off up phase where expenses exceed sales, may find that they are able to recover a significant amount of taxes. This ought to balanced against likely competitive advantage achieved from not charging the GST, as well as the additional administrative costs (hassle) from having to file returns.